Lebanon devalues the national currency by 90%
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The head of the Central Bank of Lebanon Riad Salame announced a new exchange rate of the national currency. Reuters writes about this.
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According to him, from February 1, the new official exchange rate of the Lebanese currency will be equal to 15 thousand. Lebanese pounds per US dollar, which means a 90% devaluation of the country’s currency compared to the current official exchange rate (1507), which has remained unchanged for 25 years.
Who will be affected by the changes?
Salame noted that the amendment will affect banks and lead to a decrease in the institution’s own capital. Analysts polled by Reuters expect the change to have a minimal impact on the economy as a whole, as Lebanon’s economy is increasingly dollarized and most transactions here take place at the black market rate. On Tuesday, 57,000 were given for a dollar on the black market. Lebanese pounds
Riad Salameh also noted that the commercial banks of the country “will see how the part of their capital, which is in pounds, will decrease after the conversion into dollars at the rate of 15 thousand. for US dollars instead of 1.5 thousand for the US dollar”.
In order to mitigate the consequences of this change, banks will be given five years “to recover losses caused by devaluation”, the head of the regulator said.
Agreement with the IMF
He also noted that the devaluation of the currency rate will be a step towards the unification of several exchange rates in accordance with the draft agreement reached by Lebanon with the International Monetary Fund (IMF) last year.
This condition must be fulfilled in order to unblock the $3 billion financial aid allocated to the country by the IMF.
Currently, several currency rates are maintained in Lebanon: the official rate, the rate of the central bank at the Sayrafa exchange site, and the rate of the parallel market.
The agreement with the IMF is a way for Lebanon to recover from the consequences of the 2019 crisis, the agency writes.
Despite the fact that controls on the movement of capital in Lebanon have never been officially established, since 2019, banks have introduced their own control measures. This significantly limited the withdrawal of funds in dollars and Lebanese pounds.
Source: Ministry of Finance
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